From my reference materials, the use of a spouse or child as a broker on either a self-directed IRA or a self-directed brokerage account in a qualified plan would be a prohibited transaction. I think PTCE 97-11 might make this situation OK for an IRA or self-employed plan, but what are the reduced cost services? Can any fees be charged in this situation?

This plan is not a self-employed plan and it allows self-directed brokerage accounts. An employee who is a stockholder in a C corp wants to move his account to his son who is a broker. As far as I can see this is at least a prohibited transaction under self-dealing. Does anyone have any good cites for this situation?

Taxpayer had an IRA. The IRA was payable to a Marital Trust and a Family Trust under a formula contained in the beneficiary designation. Taxpayer died before his RBD. IRA was divided into two shares (one for the marital trust and one for the family trust). Surviving spouse is oldest designated beneficiary, so all distributions are coming out over her life expectancy.

We want to further divide the Family Trust portion of the IRA into 3 parts, one for each kid, liquidate the family trust, and distribute to each kid directly his or her right to receive payments from the IRA subaccount.

I talked with an IRS guy today who said he'd ruled favorably on a similar transaction. He thought late 1997 or early 1998. I cannot find this letter ruling and it's driving my bonkers!!!! Does anyone have any leads or comments?

Thanks!!

A member of one of our self-funded medical plans has apparently purchased an individual policy on his own 9first tiem I have seen this). There is now some confusion as to who will pay prime. If anyone out there knows this one off the top of their head, I would appreciate it. Also: could anyone refer me to an online source for regulation covering order of benefits in general?

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Are employers restricted from changing employee contribution rates more than once each year?

Thanks for any help you can give me!

Robyn

I have a self-funded medical plan that inserted the following language in their SPD:

Federal law requires an employer's group health plan to provide "COBRA" continuation coverage, for certain persons who would otherwise lose their coverage. In addition, most states require the insurers issuing the underlying group policy to allow persons who are losing their group coverage (and who have used up their COBRA) to "covert" to an individual policy.

Here are my questions:

1. Would these state "conversion" rules ever apply to a self-insured group health plan?

2. Do employers with self-insured health plans ever chose, as a design matter, to make conversion policies available, even though they are not required?

3. If so, why? Wouldn't it be easier for the employer to just provide extended continuation coverage, beyond what it required by COBRA?

Help! Can anyone point me in the direction of some good, easy to understand explanation of the HIPAA administrative simplification requirements? I would prefer a seminar, but printed material is OK too.

I have been asked to do an overview of this and set up a plan for one division of our organization. However, the structure of this organization leads to many difficulties. I work for a TPA that is under the corporate umbrella of a health care foundation. Other entities beside the TPA are a hospital, 2 licensed insurance companies, an HMO, a federal HMO, a Medicare plus choice program, provider network, etc. I'm pretty sure some divisions of the foundation have started their own independent analysis and corporate culture does little to encourage coordination among the departments.

An ee receives a lump sum. plan provides for a COLA tied to the increase in CPI. What is a reasonable future COLA assumption when determining a lump sum. At this point it seems an employer can exclude the COLA on the groiunds that there is no way to say if the COLA will be positive or negative.

Curious to hear any comments.

One suggestion is to take a long term avg of past annual changes in the CPI.

Is the compensation limit for 3/31/00 $160000 or $170000?

I'm trying to correctly calculate the exclusion allowance for a person who only will work a partial year. Is the formula supposed to be calculated with an annualized salary, or the pro-rated salary that the person will actually receive?

I am new to this position and I don't think this qualifies as a status change. I believe the participant is still an employee while she's out on STD.

A friend of mine who works for a small local TPA was told by an IRS representative that separate TIN's for retirement plans and trusts were no longer needed and that plans should, instead, use the plan sponsor's EIN to report withheld taxes and distributions.

The reasons given were (a) form 945 identifies withheld taxes as coming from a qualified plan, thus eliminating the need for a separate EIN for the trust, and (B) TIN's that are not used for an (unspecified) number of years become inactive and are purged from IRS records. The IRS representative also asked my friend why she thought TIN's were ever needed for retirement plans and/or trusts.

The IRS representative refused to give more specific information (Rev Proc, PLR, form instructions, etc.) stating that she was "too busy" and that my friend should "look it up herself". It sounds to me like my friend has run into a representative who does not have a very good understanding of retirement plans.

Since I work primarily in the small plan area, the IRS representative's second point concerns me a bit. It is not unusual for some of my clients to go several years without making a distribution. If their TIN is purged because they haven't used it to report distributions, I would expect problems when they attempt to use it.

Anyone else been told that separate TIN's are no longer needed or that some TIN's are purged?

Has there been a recent IRS ruling or document on plan term fees being paid from the plan for DC plans?? My understanding was that settlement fees could not be paid from the plan. Thanks.

I have been hearing a few rumors. The last thing I hear was that they may require a "safe harbor" contribution of approx 3% which would be fully vested immediately. I realize no decision has been made but want have some of you been hearing. I appreciate the information! Thank you!

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Cathy,

Look at lines 4d and 4e of the Schedule T and the blank lines provided, then refer to the instructions. Does this answer your question? (I believe that there is no need for attachments as long as there are 4 or fewer disaggregated parts of the plan).

I've read that a 503©(3) nonprofit cannot establish a SIMPLE IRA but can a SIMPLE 401(k). Does anyone have a reason for this? Thanks.

We are looking for practical feedback on how other independent TPA firms may handle the following situation.

Plan Background: Standardized 401(k) plan (Corbel) with forfeitures used to reduce contributions (match only). Match is 25% of first 6% with discretionary match above 25%. Many participants terminated during the year, so there were significant forfeitures. The employer contributes the match each payroll along with the deferrals. By the time the forfeiture amount was determined, it was well into the following plan year.

Question 1: Since forfeitures were not calculated until late the following year, can the forfeitures be used to offset employer contributions from the following year rather than the actual year of the forfeitures?

Question 2: Since the forfeitures were not known until late in the following year and the company had been contributing the match all along, the available forfeitures exceeded the amount of the required match for the remainder of the year. If the employer has not yet filed the corporate tax return, can he take the employer contribution back (a mistake in fact) and claim a $0 employer contribution on the corporate tax return?

Question 3: If the employer can not get the money back, can the excess forfeitures be carried over to the next plan year?

Question 4: In general, if due to the preference of either the employer or the investment company, can forfeiture money be sent back to the employer so it can write a check for an employer contribution rather than directing the money be taken from the forfeiture account each month?

I thought I read last week (on BenefitsLink?) that there was a web site where you could pay to look at archived Form 5500, even one person plans. Did I make this up? HELP!!

I thought I read last week (on BenefitsLink?) that there was a web site where you could pay to look at archived Form 5500, even one person plans. Did I make this up? HELP!!

Form 5500 and 5500EZ have now added for the first time the identification of a "paid preparer" (line 5). Instructions say that completion is optional. I'd be curious to know what other TPAs and actuaries think about the completion/noncompletion of this item and any potential ramifications.